Australian bitcoin mining and digital payments company Digital CC Limited has had to answer some awkward questions after its share price went into freefall on January 14, while share trading volume skyrocketed.
Digital CC, which listed on the Australian Securities Exchange (ASX) last year via a reverse takeover and trades as DigitalBTC, has seen a moderate but steady downward trend in its share price over the past six months.
Last week, however, Digital CC's share price fell steeply from a relatively steady AU$0.14 on January 14 to an intra-day low of AU$0.083 on January 16. At the same time, the volume of its shares traded blew out from 9,000 on Wednesday last week to 416,125 on Friday.
The fluctuation was great enough for the ASX to send Digital CC a notice querying the company's share activity.
Digital CC was asked by the ASX whether it was aware of any undisclosed information that could have affected the fluctuation in share price and market activity.
According to Digital CC, the culprit behind the fluctuation was the 22 percent dump in value that bitcoin experienced on January 14.
"The current bitcoin price impacts the profitability of the company's ongoing inventory, which is what the company believes is the reason for the recent price movement," Digital CC secretary Rachel Jellef said in the company's response to the ASX query.
Bitcoin is a notoriously volatile unit of economic value, but the crash it experienced last week, from $224 to $175 in a matter of hours, has been one of the more noteworthy bumps in the digital currency's tumultuous history.
The plunge also seems to have impacted other cryptocurrencies, with dogecoin, litecoin, and darkcoin also seeing their values drop following bitcoin's plummet.
Already at the time of writing, bitcoin has climbed back up to $210.32, but that is well below the $1,000 it flew past in late 2013. Bitcoin has had substantial tumbles in the past, falling from $589 to $468 in mid August last year, and again from $385 to $294 in early October 2014.
Given the continued volatility of the digital currency, Digital CC is working to fast track the launch of the consumer applications it currently has under development.
It hopes to become "a vertically integrated" payment technology company, it said in a statement.
Late last year, the company launched its digitalX-branded range of products, including its digitalX Pocket digital bitcoin payments platform.
"These new consumer bitcoin applications will be the focus of the company's resources and a key driver of its future growth and value," it said.
While Digital CC claims to have generated nearly AU$10 million in revenue from around nine months of bitcoin mining, the obvious drawbacks of such a volatile asset has prompted the company to minimise its overheads.
"To maintain profitable operating margins in its mining activities given the recent decrease in the price of bitcoin, the company has been renegotiating power and other operating costs to maintain competitiveness in a lower bitcoin price environment which currently exists," the company said.
Digital CC claimed cash reserves of AU$4.36 million at the end of September, but reported a negative net operating cash flow of AU$-261,000 for the quarter.